The Risk Assessment program for incurred cost proposal audits will continue.

Outside CPA firms doing audits of incurred cost proposals are a bad idea because they are not qualified and lack governmental authority.

She opposes proposed legislation requiring GS-14 managers to be CPAs because CPA skills do not translate to government contracting work (Yes, we are going to have fun with that one).

She opposes proposed legislation requiring incurred costs proposal audits to be completed within one year of adequate submission because this would eliminate the efficiency of doing multiyear audits.

What is not clear is if DCAA is actually caught up. In the era of parsing words within the beltway, she states that there still is a backlog and the hiring freeze makes it impossible for them to catch up.

Best line from the industry testimony so far:

David Berteau, Professional Services Council

“As one of our member companies characterized it, DCAA should focus on being an auditing agency, not a collection agency”

A recent GSA RFP awarded 9.15% (7,600 out of 83,100 points) of possible RFP scoring points for approved accounting and purchasing systems, systems approved by DCAA or another government agency. The approval of the critical systems by private accounting firms did not receive any points.

“For the 27 DCAA CAS reports we selected, we identified several instances in which contracting officers did not comply with FAR, DoD Instruction 7640.02, or agency instructions. We found:

• 12 instances in which contracting officers did not issue a Notice of Potential Noncompliance within 15 days, as FAR 30.605(b)(1) requires; • 16 instances when contracting officers failed to complete all actions on the reported noncompliances within 12 months, as DoD Instruction 7640.02 requires; • 3 instances in which contracting officers did not have adequate documentation or rationale for determining that the DCAA-reported noncompliance was immaterial, contrary to FAR 30.602; and • 8 instances in which contracting officers did not obtain a legal review of their CAS determination, as Defense Contract Management Agency (DCMA), Instruction 108 requires.

As a result, correction of the reported CAS noncompliances was delayed. In addition, contractors may have been inappropriately reimbursed contractors additional costs resulting from the noncompliance.”

DOD issues a class deviation from the FAR that addresses employee confidentiality agreements. If DOD determines that such an agreement can restrict an employee’s ability to report waste or fraud, DOD can yank the contractor’s funding.

As usual, the joy will be in the interpretation of the word ‘restricting’. Good financial ethics, as modeled in my book, require a concerned employee to report up the chain of command. Could telling someone else in the company before calling the government be considered ‘restrictive’?